Trump administration's IRS job cuts could delay refunds, impact small business services

WASHINGTON (7News) — More than 6,000 Internal Revenue Service (IRS) jobs are reportedly being cut amid the busy tax season. The move by the Trump administration will shrink the agency’s workforce by about 6%.

In the past few years, Congress has awarded the IRS billions of dollars.

Experts worry this could undermine taxpayer compliance. Some of the layoffs were issued Thursday night and will continue over the next several days.

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Managers have been advised to cut newer hires and those still on probation, as well as employees who have been in their jobs for less than one year or two years, depending on their position.

After receiving $80 billion in special one-time funding from Congress three years ago, the agency has been on a hiring blitz as part of a sweeping effort to improve services. For years, one of the biggest issues was that the IRS was chronically underfunded.

7News had a chance to discuss the firings with Ian Gary, Executive Director of the FACT Coalition. He fears that these cuts are likely to disproportionately affect recent investments and hirings put in place for special assignments.

“Congress appropriated billions of dollars to invest in the IRS to make sure that the wealthy, and rich and powerful cooperations are not able to evade taxes,” Gary said. “We are very concerned that these staffing cuts are going to hit some of the newer employees whose jobs are to specifically investigate and undertake complex investigations to go after this kind of tax evasion.”

Nearly two-thirds of IRS employees are eligible to retire in the next six years.

President Donald Trump is slashing the staff in a move to continue to downsize the federal workforce and save the government money. However, financial experts worry the move could disrupt some tax returns and refund processing over the next few months.

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7News is breaking down how these layoffs could affect tax returns, as millions are now filing.

The majority of the cuts are reportedly in the Small Business/Self Employment department. A division that oversees roughly 57 million taxpayers. According to internal communications, most aren’t deemed "critical" to the current return-filing season.

However, the job cuts could understaff processing centers, possibly causing longer waits, fewer opportunities to speak with agency representatives, and reduced service hours. The layoffs could also lower the odds of facing an IRS audit.

Many are now asking if they should file earlier than usual or wait till the dust settles. Tax expert Timothy Wingate said expect delays with refunds, and if you are ready to file now do it, but only if you are ready.

“Because there’s some individuals who are waiting on K-1 statements from businesses that they may be a part of, wait on those things to come in. If you are waiting on 1099 to come through, wait on those things to come through and then file,” said Wingate, the founder and president of G+F Business & Financial Consulting. “Because some people like to get ahead of the game and they want to file and then plan to file an amendment later, I wouldn’t say file an amendment later. Don’t count on that because that’s just going to prolong things.”

Currently, only about one in 200 taxpayer returns are audited, and that includes the IRS simply seeking more information or clarification on a tax return.

The tax season began with the IRS accepting returns on Jan. 27 and has a regular deadline of April 15, with extensions available to Oct. 15.